How Iran Obtains U.S. Technology

The Islamic Republic of Iran announced this week that it has already starting enriching uranium at its nuclear facility at Natanz, giving the Obama administration ammunition in its drive to pressure Russia and China into imposing tough new sanctions against Iran.

But, as we found out, it's no easy task enforcing the sanctions that already exist in this country. Iran is getting hi-tech materials and components for a variety of weapons from right here in the USA, and we have a total embargo: blanket sanctions against any trade with Iran.

Our law enforcement agencies have become more aggressive in hunting down and catching the smugglers engaged in this illicit trade. Yet it is an ongoing cat and mouse game.

One reason it's been so hard to shut this down is that Iran often turns to under-the-radar middlemen who run small trading companies around the world. Some are based in American cities.

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"Are you a procurement agent for Iran?" 60 Minutes correspondent Lesley Stahl asked Mohammad Vaghari, an Iranian who has lived in the U.S. for 15 years and is facing up to 85 years in prison.

"No, that's ridiculous, no," he replied.

"But of course that's sort of the implication of the case against you," Stahl pointed out.

"I'm nothing to do with the Iranian government or things like that at all," Vaghari said.

Vaghari and his lawyers are preparing for his trial next month on charges that he conspired to send U.S. technology to Iran through a trading company he set up in his basement apartment in Philadelphia.

"You are charged with trying to buy a centrifuge that could be used to make biological weapons like anthrax," Stahl remarked.

"I don't know about that. I'm not a biological expert to tell you…," Vaghari said.

"That's in the affidavit, and it's part of the charges against you," Stahl said.

"Yes, that's what they say," Vaghari replied.

He says his client for the centrifuge was a science lab at a university in Dubai, but he says he never bought it, he only asked for its price.

"It was too expensive," Vaghari said. "You know, we couldn't afford such a thing."

"This is apparently why the FBI came to you…over this centrifuge because the salesperson who you spoke to got suspicious. Says he asked you all kinds of questions. He asked you for a shipping address that you wouldn't give him," Stahl remarked.

"I told them we are a middleman. I just want to know how much is this?" Vaghari replied.

But this middleman fit a pattern: a U.S.-based Iranian with a small export company trying to send technology to Dubai, which is a popular port for sending goods on to Iran.

The FBI then learned that Vaghari was asked to buy a hydrophone that could be used to listen to submarines, and laptops.

Vaghari did end up sending three items to Dubai, but says they were "very common college lab equipment."

Asked if the items ended up going to Iran, he told Stahl, "Never, no."

"You're sure of that?" Stahl asked.

"As far as I know, yes," Vaghari replied.

"Is it your argument that you were duped, that there were people in Iran and they fooled you into thinking the stuff was going to Dubai, when it was really going to Iran?" Stahl asked.

"No. The stuff was intended for Dubai, and ended up in Dubai and stayed in Dubai. That's what I think," Vaghari said.

But in a search of his apartment, the FBI found e-mails asking him to make inquiries for the Pasteur Institute and Tarbiat Modares University, both are based in Tehran and, according to intelligence out of Europe, both are trying to buy lab equipment in the west that could be used to produce biological weapons.

Vaghari will argue in court that the equipment was for Iranian professors who work in Dubai.

Asked if he thinks the whole premise of the U.S. case against him is faulty, Vaghari said, "Doesn't make sense."

David Kris is the head of the National Security Division at the Justice Department. He says most middlemen aren't in it for politics.

"They're people who I think are primarily motivated by profit," Kris said. "They want to make money. And they're adaptable and intelligent and we have to adapt to keep pace with them."

"The Vaghari case. He seems like such a low-level guy. He operated out of his basement, he had no money," Stahl remarked.

"The Iranians will exploit an opportunity if they see one. And whether the guy is sort of some kind of fancy pants, international arms dealer, with a mink coat and a private jet, or whether he's some guy operating out of a basement somewhere in some kind of classic boiler room style operation, it doesn't really matter to them as long as they get the technology that they are seeking at the other end of it," Kris said.

Kris leads a multi-agency effort to hunt down the smugglers. A lot of the investigative work is done by ICE, U.S. Immigration and Customs Enforcement.

Clark Settles, a special agent with ICE, says the wake-up call came in 2005 when U.S. soldiers in Iraq stumbled upon an unexploded roadside bomb.

Inside the IED was an American chip.

"And what I can say is that they're finding that on a regular basis, that there's U.S. components inside of IEDs in Iraq and Afghanistan," Settles told Stahl.

The government learned that the U.S. manufacturer had sent the chips to Dubai. They were sent on to Iran, and then given to insurgents in Iraq.

Settles also showed Stahl U.S. items smugglers were caught buying for Iran that could be used in their nuclear program: ballistic missile parts, tiny radar components, and sensitive devices crucial to build a nuclear bomb, called "pressure transducers."

Settles told Stahl a pressure transducer is an "integral part of enriching uranium."

Iran may have succeeded in obtaining these pressure transducers. In a photo of President Mahmoud Ahmadinejad in Iran's nuclear facility in Natanz, a transducer looking exactly like the one Settles showed Stahl can be seen in the background.

"The Iranians were trying to acquire these transducers," Settles said.

One reason it's so hard to enforce the sanctions is that many items Iran wants are sold for non-military uses. Like a triggered spark gap.

"The triggered spark gap can be utilized in a lithotripter, which is a machine, a medical device, that breaks up kidney stones. And it's also used to detonate a nuclear weapon," Settles explained.

"So, this is the typical dual-use item?" Stahl asked.

"A very scary dual-use item," Settles replied.

"Now after you catch someone have you been able to flip them?" Stahl asked.

"Absolutely," Settles said.

But when asked whether, using these informants, they have been able to sabotage some of the items being sent over, Settles said, "I can't comment on anything like that."

The Justice Department has indicted over 100 alleged smugglers working for Iran in the past three years, but many remain out of reach.

"There are people in Iran, or in certain non-extradition countries, where we may have difficulty getting to them. On the other hand, we've had cases where we have charges against somebody, and years later they travel, and maybe they think we've forgotten about them. But we don't forget," David Kris said.

He's talking about people like Majid Kakavand, an Iranian electrical engineer from Tehran. "I'm not criminal. I haven't done anything. I am innocent," Kakavand told 60 Minutes.

Kakavand was tracked down a year ago as he landed in Paris on vacation. "I was arrested by the police in the airport. They said, 'Okay, there is an arrest warrant against you issued by the United States,'" he recalled.

The French sent him to prison pending his extradition to the U.S. where he faces charges that he tricked several American companies into shipping tens of thousands of electrical components destined for Iran, but via Malaysia.

He and his business partners sent a blizzard of e-mail orders to companies they found on the Internet. We found a company that responded, in Huntsville, Ala.

"Now, we're here because you ended up selling one of your devices to Iran," Stahl said to Lynn Leeper, the CEO of AZ Technology, which makes aerospace testing equipment.

"By accident, certainly," Leeper replied.

She sold Kakavand a spectro-reflectometer, a device with various uses including, the government says, enhancing the capability of long-range missiles. She says Kakavand's trading company lied to her in their e-mails.

Leeper said her company asked who the end user of the product would be and says she was told the device was going to Malaysian Telecom.

"Did that make any sense?" Stahl asked.

"Yeah, actually, it's a reasonable request," Leeper said.

So she sold it for $95,000 and off it went to Kuala Lumpur.

"We know actually from the indictment of Mr. Kakavand that he had arranged for your product to be flown via Iran Air right into Tehran. Do you know even now who the actual recipient of it was?" Stahl asked Leeper.

"In the indictments there were two companies listed: one of them is - does deal with electro-optical equipment," she replied.

"And also weapons of mass destruction," Stahl remarked.

"Of course, yes," Leeper said.

That company is a subsidiary of Iran Electronics Industries, a contractor that makes weapons and communication systems for the Iranian military. It seems like an open-and-shut case against Kakavand, but it isn't.

"Nowhere else in the world this is considered as a crime. Nowhere else except in the United States," attorney Diane Francois told Stahl

Francois is Kakavand's lawyer in Paris, where he's fighting his extradition to the U.S. She explains that in Europe there are no sanctions against trading with Iran, except when it comes to arms and nuclear sales.

"The United States is somehow asking foreign countries to recognize their embargo, their national defense interest, while it is not at all the one of other sovereign countries," Francois said.

"Do the Europeans, and the French particularly, have no moral issues selling electronics or anything that could conceivably be used in weapons to Iran?" Stahl asked.

"Look, that is first, a political question. And I disagree with the question itself," Francois replied. "To the best of my knowledge, trading with Iran on many commodities has absolutely nothing to do with the nuclear program of Iran."

"Your client wasn't buying dresses, he wasn't buying tables, he was buying electronics. And he was sending them to Iran," Stahl remarked.

"He was buying a lot of electrical components. And this is still not forbidden by any legislation other than your embargo," Francois replied.

"We're talking about tens of thousands of different items here," Stahl pointed out.

"Well, I mean, you can buy 50,000 plugs at 50 cents each. It doesn't make you a great criminal," she replied.

Francois says nothing he bought meets the definition of "arms" that are restricted for sale under French law.

But the Justice Department argues that Kakavand was doing business in the U.S., not France; and that he lied to get the goods. A court in Paris is due to rule on Kakavand's fate this week.

"It seems I am a victim of the existing policies between Iran and the United States and the other countries," he said.

"You have gone after some big fish. But then, they get caught in various countries. And those countries let them go. In country after country, Hong Kong, Thailand, Poland," Stahl said to David Kris.

"It's always frustrating if you think you've found a bad guy and you can't lay hands on him. Sometimes you win, sometimes you lose, and you just keep going," he replied.

Iran has publicly condemned the U.S. and France for Kakavand's arrest. If he is extradited, it'll be a landmark victory for enforcing the sanctions abroad. But there are many more smugglers out there.

"Do you have the feeling, as we've heard, that you can shut someone down, and five new people take their place?" Stahl asked Kris.

"I have a feeling that there are a lot of different people out there who are trying to do this, but I think we are making a difference even if we're not stopping every transaction that would otherwise occur," he replied.

"One frustrated agent told us 'We're only catching the dumb ones,'" Stahl remarked.

"Well, the dumber you are, the more likely we are to catch you," Kris said. "But I'd like to think we've caught some smart people too."

Produced by Shachar Bar-On and Meghan Frank